Political risk on financial market
One of the highest dangers for modern society, economy and also economics is political risk. Nowadays, enormous influence of political risk on business is being observed. The scale and dynamics of political interference in economy allows to describe this situation as domination of political risk over economy. Therefore, the rationality of business activities is becoming more questionable. The adequate assessment of political risk is very controversial due to many hidden political factors which change risk into uncountable uncertainty. The political pressure leads modern economy to the model of almost economic fiction.
The same growing dangerous process is perceived also on the financial market. For better effectiveness of financial investments new analytical competences are urgently needed – competences of political risk analysis.
The aim of the elaboration is to indicate the problem of political risk on financial market. The considerations in the article are focused on fundamental changes in modern economy and finance created by growing political risk – political uncertainty.
The issue is presented in two aspects: theoretical and empirical, respecting international and also Polish experience.
Data / Methods
In the article, comparison method, statistical method, induction method and case study method were used.
Conclusion
The problem of political risk on financial market due to economic effectiveness of financial operations is a very important subject of scientific research. The process is not only very controversial, but also inspiring, taking into consideration the scientific challenge of correct understanding of modern economy.
Expectations for more responsible and reasonable economy & financial business are connected not only with basic foundations of business rationality, but unfortunately also with serious evidence and doubts concerning negative political impact on financial market.